(CN) – The Supreme Court on Monday rejected Global NAPs’ petition to review a decision under which it must pay Verizon Massachusetts $57.7 million for dial-up Internet access fees.
GNAP had argued that it should not have to pay long-distance access charges for Internet traffic routed outside callers’ local area.
Federal law requires carriers to pay “reciprocal compensation” for local calls. For long-distance calls, the long-distance carrier pays “access charges” to the carrier that starts and stops a call.
Verizon had to pay reciprocal compensation to GNAPs from the many long calls made by dial-up Internet users. Because ISPs never make calls, however, the payments were one-sided and GNAPs raked in windfall profits.
GNAPs further exploited the imbalance, Verizon claimed, by giving ISPs virtual phone numbers that appeared local to Verizon customers.
The Massachusetts Department of Telecommunications and Energy ruled in 2002 that GNAPs should pay long-distance access charges to Verizon whenever Internet traffic is routed outside the caller’s area, regardless of the number the Web user dialed.
GNAPs refused to pay the charges for three years, until Verizon finally cut its service in 2006. Verizon sued and won more than $57.7 million. Fearing GNAPs would transfer assets to avoid liability, it filed counterclaims seeking to hold founder Frank Gangi and several GNAPs affiliates liable for the judgment.
The 1st Cuirt dismissed GNAPs’ appeal of the judgment and counterclaims in May 2010.
It noted that a federal judge in Connecticut “found substantial evidence” that GNAPs had tried to block discovery and “had concealed and destroyed evidence.”
GNAPs also “played fast and loose with the courts in an effort to gain an unfair advantage,” Chief Judge Sandra Lynch wrote.
In its petition for Supreme Court review, GNAPs asked the court to consider whether states can regulate rates for the intrastate portion of telephone calls to or from the Internet. GNAPs also asked whether Verizon should have first brought its claim for the disputed charges to the state commission, which approved their interconnection agreement.
The justices declined to comment in rejecting the petition.